but banks release the home loan in stages

Daily Diary: January 11, 2025

Today, a site owner called me to discuss how to set up a staircase. They needed clear details, so I prepared a drawing with all the important parts like the riser, tread, flight, and landing. Later, they requested some changes in the design. To make it easier for them, I invited them to my office and showed the updated design in 3D on my laptop. This helped them understand how the staircase would look after the changes.

I also thought about an important challenge when working on projects that include materials. Many owners take home loans for construction, but banks release the home loan in stages, like at plinth, lintel, and slab levels, instead of giving the full amount at once. This can cause payment delays, which can create problems during the project.

Solutions to Payment Issues

To avoid these issues, I came up with some solutions:

• Stage-Wise Payments: Divide the payments into stages in the contract. For example, payments should be made after completing the plinth, lintel, and slab levels. This ensures payments match the bank’s loan disbursements.
• Ask for Advance Payment: Start the project with a small advance payment. This will help cover the cost of materials and labor initially. The advance can be adjusted in later stages.
• Add a Payment Buffer: Allow a few extra days (like 7-10 days) after completing a stage for the owner to arrange funds, so there’s no rush.
• Help with Loan Process: Support the owner by explaining what documents are needed for their loan, such as progress reports, photos, and contractor bills. You can also coordinate with the bank to ensure smooth disbursements.
• Protect Material Ownership: Until full payments are made, keep ownership of unused materials like cement or bricks to avoid losses if payments are delayed.
• Penalty for Late Payments: Add a clause in the contract for a penalty if payments are delayed beyond the agreed time. This motivates owners to pay on time.
• Avoid Large Credit Terms: Don’t spend too much from your own funds for materials or labor. Keep payments tied to work progress to maintain cash flow.
• Emergency Fund: Keep some money aside to handle delays in payments without stopping the work.

By following these steps, I can manage payment-related challenges better and ensure the project runs smoothly. This experience reminded me how important it is to plan everything carefully in construction projects.